Alwaght- Despite the fact that Gaza war is taking place in a limited geographical area, it overshadows a set of other issues including the gas resources in the Mediterranean. While the world energy market has still been adapting itself to the OPEC output cuts and the consequences of Russia’s Ukraine campaign, Gaza war heightened the market tensions since October 7.
Anadolu news agency has recently shed light on the impacts of Gaza war on Eastern Mediterranean Gaza resources. Ali Semin, a professor at Istanbul University of Gelişim, in a piece has pointed to the changes Eastern Mediterranean has undergone after Gaza war.
According to this university professor the Eastern Mediterranean region is of great geopolitical importance given it bordering countries such as Turkey, Egypt, Israel, Northern Cyprus, and the Greek Cyprus. In addition to geopolitical importance, this region is also very important in terms of huge energy resources. He adds that this region has 1.7 billion barrels of oil and 3.5 trillion cubic meters of natural gas reserves, and it is witnessing serious competition between regional and global powers in this regard and many international companies are present and operating there.
He maintains that due to the tensions of regional powers like Turkey, Greece, Egypt, Israeli regime, and Cyprus and also because of ongoing American, French, and British interference in the region, a war is a likely scenario.
“The Eastern Mediterranean Gas Forum, established by Egypt, the Greek Cypriot administration, Greece, Israel, Italy, Jordan and Palestine in 2019, highlighted the energy competition in the region,” Semin adds.
Eastern Mediterranean energy equation
In recent years, the Eastern Mediterranean has witnessed new cooperation on energy resources among countries of its coast, and at the same time, a kind of competition has also emerged between the effective actors in this region. In the framework of the Eastern Mediterranean Gas Forum held in June 2022 in Cairo, a tripartite agreement was signed between Egypt, Israel and the European Union for the transfer and export of natural gas. In order to expand the scope of this agreement, the Israeli government announced a plan to increase natural gas exports to Egypt from the Tamar field in the Mediterranean.
It is not the first time that Tamar gas facility operation has been halted because of Gaza war. During the 2021 tensions following the incidents in the Sheikh Jarrah neighborhood, Tel Aviv ordered the operator of the field, Chevron, to temporarily close down Tamar. This facility is located about 24 kilometers from the coast of Port of Ashkelon and is vulnerable to Gaza attacks. Leviathan gas, on the other hand, is almost entirely exported to Egypt through the gas pipeline that passes through the Gaza coast, and then to Jordan and Italy.
Tel Aviv’s plan to increase natural gas exports from the Tamar field has been aimed at strengthening political ties between Cairo and Tel Aviv and increasing energy exports to Europe through Egypt. In addition, Tel Aviv exports almost a third of its annual natural gas production of 28 billion cubic meters to Egypt and Jordan, and according to Israeli data for 2022, 63 percent of its natural gas was exported to Egypt and 37 percent to Jordan.
The natural gas that the Israeli regime exports to Jordan is consumed in the domestic market, while Egypt exports the natural gas it imports from the occupied territories after converting it to LNG. In other words, the two parties are engaged into a win-win formula.
In the meantime, given the fact that the energy crisis that European countries witnessed due to the war between Russia and Ukraine has turned Europe into an important market for LPG suppliers, Cairo is cashing in on liquefying Israeli Gaza and selling it to European countries.
It is noteworthy that in June 2022, the European Union signed an agreement with the Israeli regime and Egypt to meet its gas shortage after Russia cut off supplies to the continent. Therefore, if gas exports from the Mediterranean stop, European countries will face even broader energy crisis, and it will take years and maybe decades to find alternative supplies.
What happened after October 7
Since Gaza war has negatively impacted major regional and international trade and partnerships, the Mediterranean Gaza resources have not been immune to possible disruptions.
Three days after the start of the Israeli army’s attacks on Gaza, Israeli Ministry of Energy announced that it will temporarily suspend production in the Tamar gas field and will look for alternative sources to meet domestic fuel needs.
It is likely that this announcement will have a negative impact on the energy contracts signed between Tel Aviv and Egypt because it seems that the Israeli government needs cooperation with Egypt due to its inability to export natural gas, but due to the attacks on Gaza, Israeli gas exports to Egypt slumped by 60 percent.
Accordingly, since war in Gaza is expected to have long-term consequences on the future of the Eastern Mediterranean gas fields, in the meantime, the American energy giant Chevron and other companies are planning to expand their activities in the Tamar and Leviathan gas fields.
Therefore, in addition to the additional pipelines that will be extended to Egypt, the creation of LNG floating facilities in the Leviathan field will also be considered for export through Egypt.
The floating platform is expected to serve the Aphrodite field, which is equipped with a natural gas terminal off the coast of Cyprus or an onshore LNG facility.
The piece also suggests that Israeli war on Gaza not only jeopardizes energy security in Eastern Mediterranean, but also puts at stake the Israeli normalization agreements signed with the UAE, Bahrain, and Morocco in 2020.
Actually, the attack on Gaza threatens any agreement with Tel Aviv in the Eastern Mediterranean, and as a result, it will slow down the growth process of the Israeli energy sector in the medium and long term.
Israeli recent gas discoveries in Mediterranean waters have changed the energy landscape in the region and attracted billions of dollars in foreign investment, but the Tel Aviv’s intense conflict in Gaza may put the brakes on investment in gas fields near the Gaza Strip.
According to Egyptian Center for Strategic Studies (ECSS), one of the key investments in Israeli Gaza sector was made in 2020, the year when Chevron acquired Noble Energy for nearly $4 billion to own shares in Tamar and Leviathan gas fields.
According to the US Energy Information Administration, Israel is the second largest producer of natural gas in the Eastern Mediterranean after Egypt, producing an average of 276 billion cubic feet per year. According to ECSS, the increasing speed of the conflict in Gaza can rock the Israeli ability to export gas to neighboring countries or hit the confidence of foreign investors.
This means that if Gaza war enormously impact Mediterranean Gaza, the Israelis will lose huge benefits from gas exports.
In recent years, the Israeli regime has specially counted on gas resources in the Mediterranean, and Prime Minister Benjamin Netanyahu’s government announced in October that it had granted about 12 new exploration licenses to Italian Eni and British Petroleum companies. This is driven by lofty ambition of Tel Aviv to increase the natural gas production by 15 billion cubic meters by 2025, through the development of gas fields in the Mediterranean and the addition of new reserves.
From another aspect, Gaza war is expected to make serious troubles to energy security in Eastern Mediterranean, and this is risky given the European energy crisis arisen from Ukraine war.
As the war in Gaza continues, the future of the Eastern Mediterranean gas industry and its potential to become a major exporter to European or other markets will go shrouded in mystery. Undoubtedly, an escalation leading to widespread damage to gas facilities would be the worst scenario for the sector.
Having in mind that Lebanese Hezbollah has a serious dispute with Tel Aviv over maritime borders and Karish gas field dispute remains unsettled, the movement’s full involvement in Gaza war will threaten gas security in Eastern Mediterranean. Hezbollah has repeatedly warned that if last year deal on border demarcation collapses, it will strike Karish gas facility. Therefore, if war spills over to other fronts, Israeli regime and its partners will take damage in their energy plans and actually Israelis will pay the price for their warmongering.
Many world countries, especially Europeans, are bending over backwards to spare the energy markets from sliding into a supply crisis whose outcome would be higher prices and lower energy security. However, Ukraine and Gaza wars showed that energy markets are still on shaky foundations and these developments have changed the global energy equation and also global gas map. Meanwhile, as demand for power and gas grows, a question presents itself : What are the alternatives should Eastern Mediterranean gas supplies stop?
